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Riskier assets from stocks and commodities to the Australian dollar fell on Tuesday on investor caution ahead of a gathering of central bankers and economists in Wyoming later in the week which could shed some light on further stimulus plans.

European equities were expected to follow Asia lower, with financial spreadbetters calling London’s FTSE 100, Paris’s CAC-40 and Frankfurt’s DAX to open down as much as 0.7 per cent.

Global markets have enjoyed broad-based gains over the past month, spurred by hopes for a third round of bond buying or other measures from the US Federal Reserve to support growth, and expectations the European Central Bank soon will act to firmly cap borrowing costs and contain the euro zone’s debt crisis.

But investors are growing increasingly wary of the rally, which has stretched out in absence of any concrete official action, and turned to global growth worries to dictate trade on Tuesday.

“Everybody is playing a waiting game now. Even if they are in the market, it’s with a very short time horizon and in stocks that are more defensive,” said Larry Jiang, chief strategist with Guotai Junan International Securities, of Hong Kong shares, which inched down 0.2 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.4 per cent to a three-week low, dragged down by the materials sector.

Australian shares pared about half of their early gains to trade up 0.2 per cent as iron ore miners were hit by worries about weak global growth, while Japan’s Nikkei stock average turned negative, shedding 0.9 per cent under the weight of its slumping China-linked index.

“People think the market is going to be tied up here ... on concerns over slowing growth in China. We have seen quite a lot of shorting on some China-linked names, some of the machinery, chemicals, that kind of stuff,” a senior dealer at a foreign bank said.

Shanghai shares steadied after tumbling to their lowest level since March 2009 on Monday on fading hopes for more ”formal” monetary easing to underpin China’s fragile growth, as the Chinese premier failed to refer to the possibility in recent comments.

The Australian dollar, a typical gauge for investor risk appetite and highly sensitive to the outlook of Chinese economy, hit a five-week low against the US dollar of US$1.0345.

Some see value stocks even in the current environment, as companies have strengthened their balance sheets by cutting costs and building cash buffers.

“The US economy has picked up a little but that’s coming from a low level, while in Europe, all the macro numbers seem to suggest the economy is not faring very well. There is some noise of stimulus in China but generally the exporters there haven’t done too well. It’s not exactly a healthy picture for the global economy,” said Kwok Chern-Yeh, head of investment management, Japan, at Aberdeen Investment Management in Tokyo.

“If you look at the company level, though, while things are slowing, there are pockets of resilience in this market where companies have done relatively well,” he said.

The US dollar fell 0.3 per cent against the yen to 78.50 and the euro also eased 0.1 per cent to US$1.2486 after touching a one-week low.

Fed Chairman Ben Bernanke will speak at the annual Jackson Hole, Wyoming, meeting on Friday ahead of the Fed’s September 12-13 policy meeting. He has used the event in the previous two years to signal the Fed’s policy intentions. ECB President Mario Draghi is due to speak at the event on Saturday.

Next month will be pivotal for Europe, with the ECB’s policy meeting on Sept. 6, followed by the German Constitutional Court’s ruling on the euro zone’s permanent bailout fund on September 12.

ECB board member Joerg Asmussen said on Monday that the ECB will tailor its new bond-buying plan to dispel any concerns that it funds governments, and while he stopped short of when the bank would begin buying, he made clear the plan would go ahead despite Bundesbank opposition.

Greece will also face scrutiny next month from its global lenders who will assess Athens’ progress in debt cutting efforts before deciding on further aid to keep the country afloat.

Brent crude oil steadied at US$112.26 a barrel on concerns that a storm heading toward the Gulf of Mexico could strengthen into a hurricane, but US crude fell 0.2 per cent to US$95.32.

“Oil is doing what a lot of risk assets are doing these days,” said Ric Spooner, chief market analyst at CMC markets in Sydney. “We are now at a watershed level, after a significant rally and there is a reluctance to push prices above current levels, until we get details beyond the initiatives.”

Spot gold slipped 0.2 per cent to US$1,659.75 an ounce, after touching a 4-1/2 month high of US$1,676.45 on Monday.